When Determining the Costs of Each Component of a Firm's

question 33

Multiple Choice

When determining the costs of each component of a firm's capital structure, the firm must evaluate the:

• A)marginal cost of new funds
• B)total cost of new funds
• C)average cost of new funds
• D)average cost of old and new funds

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Definitions:

Rental Expenses

Rental expenses are costs incurred in the operation, maintenance, and management of rental property and can include repairs, property taxes, and mortgage interest, often deductible for tax purposes.

Schedule E

A form used by taxpayers in the United States to report income and losses from rental property, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.

Depreciation

The reduction in the value of an asset over time, due to wear and tear, age, or obsolescence.

Security Deposit

Funds provided by a tenant to a landlord at the start of a lease as protection against damage or non-payment of rent, usually refundable under certain conditions.